went to the mall wit my dykin' ass bitch, she a faggot bitch and she still suck my dick

@skrum

The cult of home ownership really is dumb. Good on Canada for not subsidizing that.

BO; I understand you fear the complicated mortgage backed securities. People generally fear things that they don't understand. So I definitely do not judge you on that.

However these things are not as complicated as you make them out to be. During the economic collapse I worked at FactSet Research Systems (www.factset.com), a leader financial data company. I assure you that CDO, credit default swaps, asset backed securities etc are all very much understood.

The issue is not lack of understanding. (Well maybe for you it is; but I digress.) The issue is not lack of understanding; it is lack of accountability.

Most of these so called "complicated" financial vehicles worked perfectly fine for many decades. That is until some of the assumptions that were used when building these vehicles were broken. Namely the quality of the source of the loans.

You say that this economic downturn was very much like the Great Depression". You say that it was people driving up the prices of assets above what they are worth. I agree in theory.

However as you can see by data done by your own Keynesian economists (http://www.investopedia.com/articles/07/housing_bubble.asp). The housing bubble didn't start to inflate till 1998.

Here is a quote from Clinton in 1999:
On signing the "Gramm-Leach-Bliley Act", President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act". (http://en.wikipedia.org/wiki/Community_Reinvestment_Act)

He was expanding the power of the banks; as he clearly states himself; all the way back in 1995.

Discussing the reasons for the Clinton administration's proposal to strengthen the CRA and further reduce red-lining, Lloyd Bentsen, Secretary of the Treasury at that time, affirmed his belief that availability of credit should not depend on where a person lives, "The only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live." Bentsen said that the proposed changes would "make it easier for lenders to show how they're complying with the Community Reinvestment Act", and "cut back a lot of the paperwork and the cost on small business loans" (same wikipedia source)

So there is the proof of Clinton relaxing credit standards and increasing the banks power for the purpose of increasing the demand for housing (mainly from low-income families).

This increase in demand led to a bubble in asset prices; and the bad credit loans broke the "complicated" financial vehicles; creating huge leveraged losses. Which caused all the banks to stop lending to protect themselves from failure. Credit crisis starts.

Btw; I know I mentioned Clinton numerous times here but my intention is not to pin this thing on Clinton. Bush continued the policies during his term and expanded them further. Remember his long winded speeches about minority home owners and the "Ownership" society which aimed to boost home ownership.

All of these policies; and past policies (mortgage interest tax benefits etc) had the effect of increasing demand for owning a home over renting a home. Eventually that the whole thing collapsed as do all government attempts to "lead" the economy via incentives.

BO: I'm sure your movie is great. But I don't need someone to tell me about the financial collapse; I was there.

QE3 has already occurred when the world intervened in the forex markets after the japanese yen flash crash

http://www.zerohedge.com/article/usdjpy-flash-crashes-all-support-taken-out-record-collapse

Sam:

But the article says that the percentage of home ownership in Canada is about the same as in the U.S.

Probably because since the interest costs are borne by the buyers, the demand for houses is a little less, so the prices of the houses falls, so the principal on which the interest is calculated is smaller, so total outlays by the buyers may be pretty much the same.

I want you to at least watch the trailer dead, if you haven't.

I understand how the mortgage securities work, I am taking finance in school. My point is they would have been illegal before the 80s, as it was noted in Liar's Poker... or maybe it was Monkey Business. Either way I don't fear what I don't understand in this case, i just want you to realize if we let the banks fail the economy would have gone under like what happened in the 1930s. The set up was the exact same, the only difference was the securities involved (stocks instead of housing). Any basic finance professor will tell you some banks/businesses are too big to fail. The government will just not let some businesses collapse because of their necessity. This isn't free market, it's akin to fascism really. I am not going to dispute Clinton probably did some things that benefited the financial industry, I am sure Bush I and Bush II also did. We can blanket the blame on a variety of figures but the facts remain that this started in the 80s and since then it hasn't brought us prosperity but rather bubble after bubble and recession after recession. If we let the banks go under, they would've lost their assets and everyone with those banks would've lost their assets (imagine Bernie Madoff times a million). Not to mention the credit freeze would've been proportionately worse and the entire rest of the world would be undergoing the same fate.

But of course the entire rest of the world follow suite with us and bailed out their economies at tax payer expense. You may not understand why we had to do that, and what people don't understand they don't like. I am suggesting you watch that movie because it should help you understand the gravity of what happened and why it was necessary to bail out the banks (and industry) like we did.

Here's an article that will help you understand the reasoning behind the bailouts: http://econ.economicshelp.org/2008/10/why-we-need-to-bailout-banks.html

And just to get the record straight, I deplore the bailouts, it's bullshit. If it were up to me I'd say let the next great depression happen, at least then we could avoid something worse in the future by seeing the error of our deregulation.

@skrum

Yes, the article calls Canada's laws pro-lender but at the same time it encourages responsible borrowing and lending. The laws don't artificially increase the demand or supply of housing. It is an example of positive regulation allowing market forces to act as they should without either side having an incentive to act in bad faith or take risks beyond reason.

While being a fan of some consumer protections foreclosure laws in America create a moral hazard for borrowers to walk away from their responsibility.

BO; there is no evidence that proves that any business is too big to fail. It is simply an assertion made by the current popular economists. There is no example in history of a business that was too big to fail; failing; or even existing.

You say it would be Bernie Madoff times a million or something. Which would mean what? No impact on me at all? Madoff did not effect me at all; nor did it effect 99.9% of the people in the world. It was private losses.

Which is exactly my point; this is clearly a game of privatizing the gains and socializing the losses. In order to sell the pain to the general public they need an Armageddon scenario to wave around like a boogyman. Good thing they have young, green, inexperience finance students willing to eat up anything they are told by the current frauds.

Good luck with school.